Case of the Missing Corn

200 million bushels of corn suddenly disappear. Could the mystery of the disappearing
corn be rich material for Erle Stanley Gardner? Probably not. Most of that
disappearing corn was fantasy corn, existing only in the imagination of some
forecasters. That missing corn was revealed in USDA's latest World Agricultural
Supply & Demand Estimates(WASDE). Further, analysis of USDA's acreage certification
report by Bryce Knorr of FarmFutures.com suggests that USDA estimates for U.S.
corn acreage may be too high by as much as 2.7 million acres. Should Knorr
be correct, another 300 million bushels of corn may disappear.

Much has been written about the size of the U.S. corn crop to be harvested
this coming Fall. Per the latest WASDE, the world will have 58.9 days of corn
consumption in reserve at the end of August 2014. That estimate presumes that
the demand forecasts are accurate. Demand higher than forecast, which is quite
likely, would make the situation worse. When global
demand growth is considered, December corn has likely already made a long-term
low, one not to be revisited.

Not part of the typical demand calculation is that represented by small speculators.
Per the COT from the U.S. CFTC, small speculators were net short more than
80 thousand contracts for future delivery of corn. As contracts mature, those
short corn must eventually repurchase contracts representing more than 400
million bushels. That additional "demand" should support prices.

August is when reality begins for Agri-Grain forecasts. Up till then it is
all paper grains. In August the real counting begins. Latest WASDE seems to
have reset the mood in Agri-Commodity markets. While admittedly too short a
time, since the beginning of August a new tone has settled into Agri-Commodity
markets as shown in following graph of percentage price changes thus far in
August.

First thing to note in that chart is the world of Agri-Food is far more
than corn. Agri-Commodity prices have been strong thus far in August.
Material weakness is evident only in butter and the stock market, both
of which are known for being somewhat "greasy". Finally, commodities in
general have developed strength this month. We note that not a month ago
Agri-Commodities and precious metals, Gold and Silver, were "written off" by
many investment "gurus".

In the above chart is plotted our index of Tier One Agri-Equities. As can
be readily observed, ignoring Agri-Equities, as many gurus would have had you
do, has had a serious cost. Agri-Equities are in their seventh year of performance.
The years ahead? People of the world will eat everyday. Consumers in developing
nations are going to further upgrade their diets. Quite
simply, incomes in China and the developing world are rising faster than the
world's ability to produce Agri-Food. That situation suggests higher prices
and volumes over time, and that means higher revenues for Agri-Industries.

AgriMoney: Wealth Creation Through
Agri-Food Investments continues as the premier source of learning
on Agri-Investing. This book opens the world of Agri-Investing to investors
that are ahead of the Street. AgriMoney is
now the primary educational resource for Agri-Investors, new or experienced.
With Labor Day approaching, now is the time to add it to your library.

Ned W. Schmidt,CFA is publisher of The
Agri-Food Value View, a monthly exploration of the Agri-Food grand
cycle being created by China, India, and Agri-Energy. To contract Ned or
to learn more, use this link: www.agrifoodvalueview.com

Ned W. Schmidt,CFA,CEBS is publisher of THE VALUE VIEW GOLD REPORT and
author of "$1,265 GOLD", published in 2003. A weekly message, TRADING
THOUGHTS, is also available to electronic subscribers. You can obtain
a copy of the last issue of THE VALUE VIEW GOLD REPORT at The
Value View Gold Report. Ned welcomes your comments and questions, and
tries to answer most all. His mission in life is to rescue investors from
the abyss of financial assets and the coming collapse of the U.S. dollar.
He can be contacted at ned@valueviewgoldreport.com